Electric vehicle sales boom unlikely to ease Asia’s dependence on energy imports, analysts warn

Global demand for lithium is likely to more than triple by 2030, but world capacity could struggle to keep up, with shortages forecast as soon as 2025

China’s dominance of the lithium market and US moves to localise battery raw material supplies could slow EV deployment to below expectations, observers say

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A Toyota electric car at the 2023 Jakarta car show in Tangerang, Indonesia. Photo: EPA-EFE

Published: 7:00pm, 7 Nov 2023

A global shift to electric vehicles is unlikely to ease Asia’s dependence on energy imports that are currently tied to fossil fuels, analysts warn, with China’s domination of critical minerals among significant challenges to resource vulnerability.

Asia currently accounts for 40 per cent of global crude oil imports but has been shaken by geopolitical uncertainties to supply chains because of the Israel-Gaza and Russia-Ukraine conflicts.

This is compounded by China’s control of minerals such as lithium – a key fuel for electric-vehicle batteries – and the US Inflation Reduction Act that aims to encourage companies to source raw materials from within the country.

Charging plugs for electric vehicles in Selangor, Malaysia. Photo: Bloomberg

“The major issue for Asian nations is the highly concentrated nature of mineral processing in China, but also not having in-house technical knowledge [except China] on mining materials – the exceptions being South Korea and Japan,” said Abhishek Murali, senior analyst of battery markets at Rystad Energy, an independent research and business intelligence firm in Norway.

The International Energy Agency (IEA) has forecast that electric vehicle sales are set to explode tenfold by 2030 – a 38 per cent market share – after the share of EVs in global car sales more than tripled to 14 per cent in the last two years.

Global demand for lithium, which was estimated at 130,000 tons in 2022, is expected to multiply more than three times by 2030 because of demand for lithium-ion EV batteries, according to Coface, a global trade insurer headquartered in France.

“The world capacity is likely not to follow the fast-growing demand for the mineral, with some experts foreseeing shortages as soon as 2025,” the firm told This Week In Asia.